NHS productivity: what is the current situation and how might the new NHS plan tackle this?
By Karen Taylor, Director, Centre for Health Solutions
In September 2024, Lord Darzi published the results of a quick and incisive review into the state of the NHS and concluded that the NHS was ’in serious trouble’.1 His report explores how we arrived at this point and identifies some key remedies. In response the Government announced its intention to develop a 10-year plan to ‘fix the NHS’ which will be published in May 2025. The start of 2025 has heralded numerous government announcements including the publication of an Elective reform plan aimed at ‘returning to the constitutional standard of 92 per cent of patients receiving treatment within 18 weeks and building a sustainable NHS that is fit for the future’.2 While the plan identifies many challenges, the need to improve NHS productivity is emphasised throughout, which reflects the findings in the Darzi review. This week’s blog focuses on analysing what has been happening to NHS productivity and what more can be done?
What are the key findings in Lord Darzi’s review?
In July 2024 the Secretary of State for Health and Social Care (SoS), Wes Streeting, commissioned Lord Darzi to carry out a rapid, independent, review of NHS performance, assessing patient access, quality of care and the overall performance of the health system, including NHS’s productivity. The review found public satisfaction with the NHS to be at an all-time low as a consequence of surging waiting lists and a deterioration in the nation’s health, worrying health inequalities and low productivity. He acknowledged that the sheer scope of issues facing the NHS was hard to quantify and articulate, identifying four interrelated drivers of current performance: austerity and constrained funding; the impact of the COVID-19 pandemic; a lack of patient voice and staff engagement; and inefficient management structures and systems.3
The report provides clear evidence of systemic and structural issues beyond NHS leaders’ control that if perpetuated will set the service up to fail. These include the failure to divert resources into more preventative care to reduce the pressure on, and improve the investment in, primary and community care, reducing the size of the centre (including regulators and the burden of regulation and inspection), and improving consistency and clarity around integrated care boards (ICBs).
Lord Darzi’s letter to the SOS identified a crucial paradox, namely that while there has been a 17 per cent growth in hospital staff since 2019, the number of appointments, operations and procedures has not increased at the same pace, meaning productivity has fallen. Moreover, there is clear evidence that the unremitting shortage of capital is a barrier to productivity, as is the desperate state of social care (with 13 per cent of NHS beds are occupied by people waiting for social care support or care in more appropriate settings. The facts and figures on hospital performance are demonstrated clearly in the accompanying technical annex, including:
- seven per cent fewer daily outpatient appointments for each consultant
- 12 per cent less surgical activity for each surgeon
- 18 per cent less activity for each clinician working in emergency medicine.4,5
Unfortunately, as Lord Darzi emphasises, falling productivity doesn’t reduce staff workload, rather ‘it crushes their enjoyment of work’, because instead of focusing on improving outcomes, staff spend a disproportionate amount of effort solving process problems such as finding available beds! A critical factor behind hospital pressures is that over the past decade spending on community and primary care has decreased significantly. This serious and contrary under investment, given the ambitions of successive governments to ‘move care closer to home’, has resulted in the inverse of the NHS’s stated strategy with fewer fully qualified GPs and nurses working in the community, significant reduction in health visitors, and the share of the NHS budget spent on hospitals increasing from 47 per cent to 58 per cent.6
So, what has happened to NHS Productivity?
Measuring NHS productivity is extremely complex.7 Prior to the pandemic, analysis by the Office for National Statistics showed that the NHS achieved hospital productivity growth at a faster rate than the rest of the public sector and the wider economy.8 After COVID-19 there was a slump but since then, there’s been a steady improvement. Data from 2023-2024 continues to indicate positive trends in hospital productivity with activity increasing more than staffing levels implying more efficient utilisation of resources.9
Research by think tanks, NHS England and local NHS organisations, provides an analysis of changes in productivity during and since the pandemic and while the drivers are complex, they include:
- reduced resilience going into the pandemic – the NHS had little spare capacity to absorb shocks with real-term reductions in capital investment resulting in a growing backlog of maintenance and increasing technology deficit
- population needs are more complex and acute – with a marked increase in complexity in admitted patients in acute hospitals
- reduced flow through the urgent and emergency care pathway and across the system – with increasing lengths of stay and constrained capacity (in and out of hospitals)
- post-pandemic turnover in experienced leadership and management - despite the necessary increase in staff, they are often inexperienced and more junior grades
- staff burnout and lower engagement – while sickness absence rates have reduced, they remain higher than 2019 with an increasing in stress related absences. Industrial action in 2023 and 2024 has contributed to higher costs and lower productivity.10
While much of the focus on productivity is on acute hospitals, the population is continuing to age and more people are living with multiple long-term conditions; patients are staying in hospital longer, they also access primary and community services in higher volumes and need more complex physical and mental health care, resulting in escalating levels of demand. This is creating additional pressure on the NHS workforce but despite these challenges there is increasing evidence of improvements being made and a strong belief that further recovery is possible.11
Recovering productivity and improving care
Analysis by the Institute for Fiscal Studies (IFS) for their November 2024 report confirms that positive trends in NHS productivity are emerging.12 For example, over the past year increases in hospital activity are larger than the increase in hospital staffing, suggesting that hospital labour productivity, as measured by the number of patients treated per staff member, has improved (albeit still below pre-pandemic levels).
However, December saw demand on acute hospitals being more intense than ever before, and performance, including productivity adversely affected. In response the Government launched an elective reform plan in the first week of January 2025, detailing numerous long-term actions aimed at cutting waiting times and improving the quality of care and outcomes of patients.
The reform plan is clear in its expectation that the continued rollout of technologies like electronic patient records and the electronic referral service (e-RS), the NHS App and the Federated Data Platform (FDP), will improve productivity and patient experience. It also expects widespread adoption of best practice as detailed in the Getting it Right First Time (GIRFT) handbooks, and NHS IMPACT productivity guides. Moreover, that NHS organisations should work with system partners to embed best practice, reform patient pathways, improve clinical job planning and work in partnerships with the independent sector. Surgical hubs and digitalised perioperative care are expected to optimise surgical pathways and theatre productivity, with the continuing roll-out of the i-Refer clinical decision support tool, the FDP inpatient solution, commercial digital and AI solutions expected to improve productivity and reduce the administrative burden on staff. We will explore the progress on productivity and many of the other reform challenges in subsequent blogs.
Conclusion
My previous value for money audit experience at the National Audit Office during the 2000s, and our past research at the Centre for Health Solutions over the past 13 years, leads me to agree with Lord Darzi’s conclusion that the NHS is in a critical condition, and that this is due, in part, to the degradation of managerial capacity and capability and the loss of trust and goodwill of many frontline staff together with services weakened by a lack of capital investment. However, despite the challenges, the NHS’s vital signs remain strong. Moreover, as Lord Darzi says, it is not a question of whether we can afford to maintain the NHS, rather, it’s more a question of can we afford not to?
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1 Summary letter from Lord Darzi to the Secretary of State for Health and Social Care - GOV.UK
2 NHS England » Reforming elective care for patients
3 Independent Investigation of the National Health Service in England
4 Summary letter from Lord Darzi to the Secretary of State for Health and Social Care - GOV.UK
5 Independent Investigation of the National Health Service in England: Technical Annex
6 NHS funding, resources and treatment volumes | Institute for Fiscal Studies
7 Productivity in the NHS: what’s getting in the way? | Nuffield Trust
8 NHS England » NHS productivity
9 Ibid.
10 Ibid.
11 Ibid.
12 NHS hospital productivity: some positive news | Institute for Fiscal Studies
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